Shares of Cassava Sciences (NASDAQ:SAVA) stock are in the spotlight following the company’s third-quarter earnings and a stark warning to short sellers. During Q3, the company reported a net loss of $20.3 million, equivalent to an EPS loss of 51 cents per share. Profitability declined, as Cassava reported a net loss of $9.6 million, or an EPS loss of 24 cents per share year over year (YOY). This was primarily attributed to increased research and development expenses related to the Phase 3 program of simufilam. CEO Remi Barbier added:
“We now have over 650 patients enrolled in our on-going Phase 3 studies of simufilam in Alzheimer’s disease, up from 150 patients approximately six months ago. We also look forward to presenting new clinical data for simufilam from two other ongoing studies in Alzheimer’s disease.”
As of Sept. 30, the company had a cash and cash equivalents balance of $174.7 million and no debt. Full-year guidance for net cash use for operations remained stable between $80 million and $90 million.
SAVA Stock: Cassava Alleges Short Sellers of a “Short and Distort” Campaign
Meanwhile, Cassava announced last week that it had filed a lawsuit against short sellers, which includes Quintessential Capital Management, neurobiologist David Bredt, and cardiologist Geoffrey Pitt. The company accused the short sellers of initiating a “short and distort” campaign, which detrimentally affected its stock price, market capitalization and development of simufilam.
The lawsuit provides examples of more than 1,000 false and defamatory statements made by the short sellers. Cassava also stated that it has hired J. Erik Connolly of Benesch Friedlander Coplan & Aronof to represent the lawsuit. Connolly has previously worked on several high-profile defamation cases, such as a $6-billion-dollar claim against ABC. He added:
“There are serious consequences when people use disinformation as a way to deflate a company’s stock price and make money by shorting the stock. These actions not only financially hurt the Company and its investors, but they also cast a permanent cloud over research being done to try to find a treatment for a terrible disease. That is just wrong.”
Quintessential managing partner Gabriel Grego appeared to be unfazed by the litigation. He characterized the lawsuit as “frivolous” and expects it to be “quickly dismissed.” Furthermore, another individual named in the lawsuit, Enea Milioris, stated that he stands by his claims.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
